| Suyog Telematics Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB- / Stable / CRISIL A3 ' | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB-/Stable/CRISIL A3’ rating on the bank loan facilities of Suyog Telematics Ltd (STL)
CRISIL Rating has also taken note of information and clarification regarding a dispute with Maharashtra State Road Development Corporation Limited (MSRDC), disseminated vide STL’s corporate announcement dated February 9th, 2022. It is noted that STL’s concessionary arrangement with MSRDC to install and operate Base Transceiver Equipment (BTS) on the flyovers in Mumbai built and operated by MSRDC and Bandra-Worli Sealink stands discontinued; and MSRDC had confiscated certain equipment installed on these sites. While, the company has approached Honorable High Court of Maharashtra with respect to the dispute and certain penalties claimed by MSRDC, the matter is currently sub-judice. As understood from the company, this event in worst case is expected to lead to loss on equipment of around Rs.2.0-2.5 crore and probable revenue loss of around Rs 14-15 crore per fiscal for the company. There are no other contingent claims on the company in this matter or any other related matter.
Accordingly, this event should not materially impact on the overall credit profile of the company given the moderate loss in revenue and on equipment. However, further developments pertaining to this event and implications thereof or deviations from the current understanding would continue to be a rating monitorable.
The ratings continue to reflect STL’s established market position, healthy financial risk profile and streamlined repayment mechanism through the presence of an escrow account and 3 month debt service reserve account (DSRA) for term loans. These strengths are partially offset by STL’s moderate scale of operations with geographical concentration, low tenancy ratio of its towers and sizeable capital expenditure (capex) expected over the medium term. |
Key Rating Drivers & Detailed Description Strengths
Above-average financial risk profile: Despite planned capex of Rs 50-60 crore over the next fiscal, financial risk profile is expected to remain healthy. Networth was Rs 143.4 crores as on March 31st 2021 and leverage level is moderate as reflected in total outside liability to adjusted networth (TOLANW) ratio of 1.2 times as on March 31, 2021. While the capex is expected to be partially funded by debt; TOLANW is likely to remain at less than 1 times over the medium term owing to moderate accruals. Any large capex over and above the expected levels (likely for 5G roll out) will be funded by equity infusion. Debt protection metrics also remain comfortable; interest coverage was 6.6 times in fiscal 2021 and net cash accruals to total debt (NCATD) was 0.98 times. Interest coverage ratio and NCATD is likely to remain comfortable over the medium term.
Operations are working capital intensive with gross current assets of 151 days as on March 31, 2021 (203 days a year ago), driven by debtors of 101 days (106 days) and large accrued income. Operations may continue to be working capital intensive. Any further elongation in receivables cycle would remain a key rating sensitivity factor. |
Liquidity: Adequate Net cash accrual, expected to be around Rs 45-50 crore per fiscal over the medium should comfortably cover annual term against debt obligation of Rs 11-13 crore. Further, the loan structure provides for an escrow account (available in case of Axis Bank) along with a DSRA equivalent to 3 months of interest and principal repayments to ensure timely servicing of the debt obligations. Capex of Rs 50-60 crore planned over next fiscal is expected to be adequately funded by internal accruals and term debt. |
Outlook: Stable STL should benefit from its promoter's experience in the telecom tower industry and established relationships with customers and agencies such as MMRDA |
Rating Sensitivity factors Upward factor
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About the company STL, incorporated in 1995 by Mr Shivshankar Lature, is a passive telecommunication infrastructure provider, engaged primarily in the business of installing and commissioning poles, towers and optical fiber cable systems. |
Key financial indicators
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Any other information: Not applicable |
Annexure - Details of instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||
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Criteria Details
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